The fallout from Pepkor's massive R21.3 billion fintech spin-out continues to shape the South African market. In today's edition of The Merchant Desk, we also unpack a new analysis of Stripe's balance sheet, revealing how the payments giant is quietly taxing the AI boom to fund its ongoing push into stablecoins and consumer wallets.
Fleshing out the details of the R21.3 billion fintech consolidation we noted yesterday, South African retail giant Pepkor is investing R1.57 billion to officially merge its Flash subsidiary with payments provider Shop2Shop. The combined platform, provisionally named 'FintechCo', will process over R200 billion in annual transactions, aiming to dominate the merchant services market in the informal economy. Pepkor will hold a 57.1% stake and plans a separate public listing for the new company within three years.
Why it matters
This is a landmark deal for South African fintech, creating a dominant, vertically integrated player aimed squarely at the informal sector. For Yoco, Ozow, and other merchant acquirers, FintechCo represents a formidable new competitor backed by Pepkor's immense distribution and balance sheet. The strategy to serve as an all-in-one 'business-in-a-box' for informal traders—combining payments, cash management, and supplier access—could fundamentally reshape merchant economics and accelerate the digitization of a market segment incumbents have struggled to capture.
In The Banker's latest annual ranking for fiscal year 2025, Capitec Bank surpassed Investec in Tier 1 Capital for the first time, cementing its position as a major force in South African banking. The bank also achieved the highest Return on Assets (ROA) of any bank in Africa, highlighting its highly efficient and profitable operating model. Standard Bank maintained its position as the country's largest bank by capital.
Why it matters
Capitec's consistent outperformance on key metrics like ROA and its climb up the capital rankings underscore the success of its low-cost, high-volume strategy. This puts sustained competitive pressure on South Africa's legacy banks and serves as a powerful case study in operational excellence and market positioning within the financial services sector. Its ability to maintain profitability while scaling is a key lesson for other digital-first challengers.
Following Stripe's rejected $53.4 billion bid for PayPal we've been tracking, a new analysis of the company's 2025 performance reveals revenue hit $6.8 billion on 33% year-over-year growth, its fastest since 2021. This re-acceleration is partly attributed to processing payments for major AI companies like OpenAI and Anthropic, effectively 'taxing' the AI boom. Alongside its push into stablecoins, the analysis highlights Stripe's aggressive diversification, including the acquisition of usage-based billing firm Metronome.
Why it matters
This provides a clear operator case study of a strategic pivot. Stripe isn't just a payments processor anymore; it's becoming a comprehensive commerce infrastructure provider that monetizes the entire software stack. The acquisitions and the (failed) PayPal bid show a deliberate strategy to reduce dependence on card interchange and build moats in AI-driven billing and alternative payment rails. For any fintech operator, this is a masterclass in anticipating market shifts and using a strong core business to fund incursions into adjacent, high-growth territories.
South Africa's FNB, Absa, and Nedbank have become partners in the Open Standard's Open USD (OUSD) stablecoin initiative. They join over 140 other organizations backing the planned US-dollar-pegged stablecoin, which is designed for global corporate treasury, cross-border payments, and programmable finance.
Why it matters
This signals serious institutional interest from major regulated South African banks in using stablecoins as a foundational layer for financial services, not just as speculative assets. Their participation suggests a strategic exploration of blockchain-based rails for improving corporate treasury functions and cross-border settlement. This could pave the way for a new generation of payment infrastructure in the region, influencing how real-time payments and B2B commerce evolve, even as local regulatory frameworks are still catching up.
Oracle has completed a proof-of-concept that integrates stablecoin payments directly into its Simphony POS system for hospitality and retail. The project, which used the NEAR blockchain, is part of a broader strategy to connect point-of-sale transactions with enterprise workflows like treasury, loyalty, and cross-border settlement using its Digital Assets Data Nexus.
Why it matters
This move by a global enterprise software giant is a significant signal for the future of merchant payments. Oracle is looking beyond simply adding another payment method; it aims to deeply embed digital assets into core ERP and treasury systems. This creates a path for merchants to achieve backend efficiencies, such as instant cross-border settlement and automated treasury management, directly from their POS, demonstrating a tangible enterprise use case for stablecoins in commerce operations.
Airtel Africa has officially chosen the London Stock Exchange for the IPO of its mobile money division in the second half of 2026. The company is reportedly targeting a valuation of around $10 billion and aims to raise approximately $1.5 billion. The decision to list in London was influenced by the access to a deeper pool of institutional capital. This follows a strong Q1 where Airtel Money's annualized transaction value grew 51.5% to over $245 billion.
Why it matters
This IPO will be a pivotal moment for African fintech, establishing the first standalone public market valuation for a major telco-led mobile money business. It will provide a crucial benchmark for the value of platforms like MTN's and Safaricom's M-Pesa, likely increasing pressure on them to also spin off their fintech arms. The massive capital injection will enable Airtel to compete more aggressively with digital banks and payment startups across the continent, particularly in its key markets of Nigeria and East Africa.
A new analysis in Payments Journal argues that the primary obstacle for African cross-border payments is not a lack of technology but a deficit in true interoperability and predictable 'last-mile' delivery. While stablecoins can solve for the speed of transit, they don't guarantee that funds can be seamlessly off-ramped into local bank accounts or mobile money wallets. The author contends that the real challenge lies in building infrastructure that unifies liquidity, provides real-time FX conversion, and connects directly to local clearing systems.
Why it matters
This perspective is crucial for any operator building for the African market. It shifts the focus from simply launching another payment rail to solving the much harder problem of integrating with a fragmented landscape of local financial systems. For merchant tech, this means success hinges on providing certainty of settlement—knowing exactly when and how much money will land in a local currency account—rather than just offering the fastest or newest payment method.
Nigerian fintech FairMoney Microfinance Bank is strategically using its network of 100,000 POS terminals as a primary tool for credit underwriting. After pivoting from consumer lending to focus on SMEs, the company leverages merchant transaction data flowing through its terminals to assess creditworthiness and provide business loans, funding its loan book primarily through customer deposits.
Why it matters
This is a powerful example of an operator repurposing existing infrastructure for a higher-value service. By turning payment acceptance devices into data sources for lending, FairMoney is creating a scalable model to address Nigeria's massive SME credit gap. This strategy of embedding lending into payments provides a significant competitive advantage in merchant acquisition and changes the unit economics of deploying POS hardware, offering a playbook for other emerging market fintechs.
Confirming the June forecasts we noted earlier this week, South Africa's headline consumer price index rose to 5.0% year-on-year, up from 4.5% in May, driven by rising costs for transport, housing, and financial services. In a silver lining for the squeezed consumers we've been tracking, food inflation dropped to a 15.5-year low of 1.4% thanks to a strong summer harvest. Despite this, the average real net salary has hit a two-year low as overall inflation erodes wage gains.
Why it matters
The divergence between falling food prices and rising core costs paints a complex picture of the South African consumer. While grocery bills may offer some relief, escalating transport and housing expenses are squeezing discretionary income. For retailers and payment providers, this signals continued pressure on non-essential spending and a consumer base that will remain highly price-sensitive and value-focused.
Nigerian fintech Moniepoint provided over $700 million in working capital loans to its merchant base in the past year. The company uses transaction data from its extensive POS network to underwrite these loans, allowing it to serve micro, small, and medium-sized enterprises (MSMEs) often overlooked by traditional banks. Despite this effort, Nigeria's SME financing gap remains a staggering $32.2 billion.
Why it matters
Moniepoint's lending success demonstrates a highly effective and profitable model for emerging market fintech. By leveraging payment data as the primary underwriting tool, it solves a core merchant pain point—access to capital—while simultaneously strengthening the stickiness of its payment ecosystem. This data-driven approach is key to de-risking SME lending and highlights a clear path to profitability in a notoriously challenging segment.
Project management software firm Monday.com is laying off hundreds of employees to shift resources toward AI product development. An analysis from FourWeekMBA frames this as a response to the 'Distributor Trap': as AI begins to automate core functions like sales and customer success, companies whose value lies in human-mediated service and distribution are forced into painful resets to avoid being disintermediated by AI-native platforms.
Why it matters
This is a cautionary tale for any B2B service or SaaS company, including many fintechs. It shows that AI is not just an efficiency tool but a potential disruptor of established business models. Companies that primarily act as distributors or integrators of underlying capabilities (like payment rails) are vulnerable if AI can automate their core value proposition. The key takeaway is the urgent need to build a defensible product moat that isn't solely reliant on a human-in-the-loop sales or support model.
Following Wednesday's launch of Microsoft's Xbox backward compatibility program on PC, early hands-on reviews from outlets like Digital Foundry are surfacing technical issues. While the initial four-game rollout—including 'Conker: Live & Reloaded' and 'Crimson Skies'—is lauded as a major step for game preservation, reviewers are noting inconsistent frame rates and scaling bugs.
Why it matters
This move represents a significant commitment by a major platform holder to game preservation, making classic console experiences accessible on modern hardware. It offers a counterpoint to the industry's trend toward digital-only ecosystems and delistings, highlighting the cultural and commercial value of maintaining access to gaming's history. For enthusiasts of the era, it's a welcome, if not yet perfect, development.
Retailers Are Becoming Fintechs Major retailers are increasingly spinning off or acquiring fintech assets to create standalone financial services businesses. Pepkor's R21.3 billion 'FintechCo' is a prime example of leveraging a vast physical footprint and customer base to build a major payments and lending player targeting the informal economy.
AI is Forcing a Hard Reset on SaaS Business Models The rise of agentic AI is forcing B2B SaaS companies to re-evaluate their entire operating model. Monday.com's layoffs to fund an AI pivot and Turnstile's new agent-native Quote-to-Cash protocol show that companies built on human-mediated distribution are now facing an existential threat from platforms that can automate core sales and support workflows.
Stablecoins Are Becoming the Enterprise Settlement Layer of Choice Beyond the hype, stablecoins are being integrated into core enterprise systems. Major South African banks are joining the Open USD initiative, Oracle is building stablecoin payments into its Simphony POS, and platforms like Ramp are offering USDC accounts, signaling a move toward programmable, real-time treasury and settlement infrastructure.
The 'Trust Gap' is the New Frontier in African Fintech Beyond just building payment rails, the next wave of African fintech is focused on solving for certainty and trust. Startups like AfrikTrust and commentary from Verto executives highlight that the biggest hurdles to scaling cross-border trade are not technological but operational: ensuring payment finality, escrow, and predictable settlement.
POS Terminals Evolve into Merchant Underwriting Tools Fintechs in Africa are repurposing Point-of-Sale devices from simple payment acceptance hardware into powerful data engines for credit underwriting. Both FairMoney and Moniepoint are leveraging transaction data from their large POS networks to assess merchant creditworthiness, enabling them to provide working capital to previously unbanked SMEs.
What to Expect
2026-07-30—The Nigeria Fintech Forum 2026 will be held in Lagos, focusing on regulation and the new operating reality for the country's fintech ecosystem.
2026-08-20—A seminar in Kuala Lumpur will focus on practical AI strategies for small and medium enterprises.
2026-10-14—The Unified Commerce Conference in Athens will feature experts discussing the future of retail, including agentic commerce.
How We Built This Briefing
Every story, researched.
Every story verified across multiple sources before publication.
🔍
Scanned
Across multiple search engines and news databases
506
📖
Read in full
Every article opened, read, and evaluated
216
⭐
Published today
Ranked by importance and verified across sources
12
— The Merchant Desk
🎙 Listen as a podcast
Subscribe in your favorite podcast app to get each new briefing delivered automatically as audio.
Apple Podcasts
Library tab → ••• menu → Follow a Show by URL → paste